This article describes how Self-Insured Groups operate and how the Joint and Several provisions apply to their members.

First, let us consider what a Self-Insured Group is. A Group is a California mutual benefit non-profit corporation created to provide workers’ compensation coverage to its members. Members of the Group are also the owners of the Group. Members elect fellow members to serve on the Board of Trustees that leads the Group.

Members contribute to the Group for their portion of workers’ compensation coverage based on their payroll size. Joint and Several means, as an owner, each member shares in the benefits and liabilities of the Group.

The Group pays the injured workers’ claims, covers the Group’s operating expenses, and maintains an investment reserve for future claims liabilities.

The State of California regulates Groups through the Office of Self Insurance Plans. Regulations enacted in 2013 require Groups to be fiscally responsible. Groups establish appropriate rates and operate within budgets that meet regulatory standards. Regulations provide numerous protections to ensure Groups are fiscally sound, including:

• An annual GAAP audit performed by an independent CPA.
• An annual independent actuarial study to determine total claims liabilities and proper funding levels.
• Establishing annual operating budgets that cover the Group’s current claims liabilities and operating expenses for twelve months plus an additional six months of claims expenses.
• Finally, a Group must always operate with a positive net equity. Positive net equity means the Group has more assets than liabilities.

A Group is a member-owned non-profit, so when there is a surplus of funds in the Group, each member owns a portion of these surplus funds. Similarly, if the Group does not collect enough contributions to cover the claims liabilities for a specific year, the members will make up the shortfall.

The Joint and Several provisions typically only come into play if a Group ceases operation. The Group then returns excess funds to or collects shortfalls from the members. These adjustments apply only to the year(s) a member was in the group.